Mumbai: HDFC Bank’s CEO, Sashidhar Jagdishan, has requested investors to be patient during the bank’s transition, comparing it to the construction of Mumbai’s coastal road, promising that benefits would follow the transition phase.
During an investor call after the bank’s results, Jagdishan emphasized that the bank’s goal was to ensure the sustainability of its deposit franchise. However, he added that the bank would not use pricing to grab market share and would go slow when faced with irrational pricing, such as in the fourth quarter. He also mentioned that the average deposits per branch had increased from Rs 260 crore to Rs 270 crore after adjusting for the HDFC merger.
“Don’t dismiss this franchise, we are going through a period of transition. It is like the coastal road..when it was being built we had all sorts of problems with it.. but now when it is up and running people are so delighted,” said Jagadishan to analysts in investors call after the bank’s results.
Jagadishan explained that the key to sustainable momentum is the bank’s enhanced customer engagement and elevated `Service First’ culture. He emphasized that HDFC Bank had reached excellence in this deposit mobilization franchise over 30 years due to their customer-first approach. The only way to be even better, according to Jagadishan, is to elevate the customer service-first culture, with a lot of measurement and monitoring mechanisms in place internally.
However, Jagadishan did not speak about the new digital initiatives, including the new mobile banking app that the bank had earlier planned to launch in the previous quarter. HDFC Bank has been facing criticism from investors due to the bank’s market value remaining below the Rs 12 lakh crore mark, compared to the Rs 12.6 lakh crore in July 2023 when the merged entity shares were traded for the first time. Customers have also been complaining on social media about the bank’s mobile application, which is the primary banking channel for most customers.
On Saturday, HDFC Bank announced a net profit of Rs 16,511 crore – an increase of 37% of last year’s pre-merger gains but 0.8% lower than the preceding quarter. The bank made extraordinary gains from sales of education loan company HDFC Credila but transferred the gains to a floating provision. The bank also announced an ex-gratia payment of Rs 1500 crore for employees as a reward for extra effort during the merger.
Jagadishan said that despite having 11% of the country’s banking deposits, HDFC Bank is still “very small” compared to State Bank of India, which has a share close to 20%. He emphasized that the bank would continue to grow its market share in deposits, which would provide momentum for loan growth.
